India Needs More Help, Less Hype from the Annual Budget

The unveiling of the Indian government’s annual budget plan is part religious ritual and part World Cup finals. It is presented with great ceremony, given play-by-play media coverage and, if you care about India’s economy, you are required to watch and get very excited.

Today’s budget, the first for the new government of Prime Minister Narendra Modi, will be closely monitored and picked apart by everyone who is anyone. A flood of news releases from movers and shakers proclaiming their elation or dismay starts soon after the finance minister stops speaking.

The next day, newspapers will dedicate way too many pages to further analysis.

Still, everyone knows that policies that first come to light in budget speeches are often overturned and even the most basic budget projections are usually off. A look at the last five budgets shows that they are usually too optimistic about gross domestic product growth, often wrong about the fiscal deficit and always off when it comes the amount of money the government will get from selling the shares of state-run companies.

Meanwhile, governments have become sneakier in recent years. They only announce big perks in the budget and any potentially unpopular policy changes they leave for later, trying to push them through when there are fewer people watching.

The stock market and much of the business community think that the new prime minister is different. His fans believe he will succeed where the last administration failed to boost the economy and push through business-friendly policies even when they are unpopular.

The big budget event on Thursday will be his first chance to prove it.

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